Exam 4: Forecasting Availability and Overbooking

In regard to the concept of overbooking, which of the following is true?

Assume that a 350-room hotel sold 70% of its rooms last night. Today, we anticipate that 150 rooms will depart. We hold 120 that are 6 p.m. reservations and 150 that are guaranteed reservations. Ten (10) rooms are reported to be out of inventory after last night's damaging monsoon. We know historically that understays are 5% and overstays are 7% of occupied rooms; that early arrivals are 2% and cancellations are 6% of expected arrivals. No shows for 6 p.m. reservations are 10%; no shows for guaranteed reservations are 3%. How many rooms are available to walk-ins?

Early arrivals, like cancellations and no-shows, reduce the number of expected arrivals.

Interestingly, out-of-inventory rooms do not affect rooms available for sale (the denominator in an occupancy equation) while out-of-order rooms do affect inventory.

Hotels will dishonor the reservations of new arrivals rather than evict guests who overstay their original reservations. This is one of the root causes of overbooking.

Guaranteed reservations made against a national credit card are less secure than many people realize. In many instances, guests who get charged a no-show but refuse to pay are supported (upheld) by their credit card company. This leaves the hotel without payment for the unoccupied room night.

On October 6, a 300-room property had occupancy of 70%. What is forecasted occupancy for October 7 if: • 10 rooms are put out-of-order at 9am on October 6 • 150 rooms are on reservation • Registration information indicates 101 rooms will depart today • The hotel as an historical 6% cancellation rate • The hotel as an historical 10% no-show rate